May 30, 2015

F35 production 2018-2020 rate could be doubled in a $36 billion bulk order to avoid annual reviews

The U.S. Defense Department is considering ordering as many as 450 F-35 aircraft from Lockheed Martin Corp., sending warplane output to the fastest in three decades as it gains confidence in the advanced fighter’s performance.

The purchase would total 150 jets annually over three years and would include aircraft destined for international customers, Undersecretary Frank Kendall told reporters during a conference call Friday from Norway, where he was attending an annual meeting of F-35 customers and producers. The deal could potentially yield “double-digit” savings, Kendall said.

The Joint Strike Fighter is intended for use by the Air Force, Navy and Marines, along with sales to U.S. allies. Output has held steady at around 35 a year while the jet undergoes flight-tests and Lockheed and its suppliers debug software and boost engine reliability. As the production tempo increases, the cost of making each jet should fall from $108 million to about $80 million by decade’s end.

The hope is the order would be $36 billion instead of $48.6 billion.

Using block buy authority instead of the multi-year procurement process to buy three years’ worth of F-35s would allow defense officials to avoid Republican Senator John McCain, the Arizona Republican who is chairman of the Senate Armed Services Committee and a frequent critic of cost overruns on the fighter program. McCain would probably not try to kill the F-35 but ask hard questions in an annual procurement process.

Signing the block buy would effectively “wall off the F-35 program from the rest of the DOD budget, and would increase budget pressure -- ‘uncertainty’ -- on other weapons systems and contractors,” he said.

The deal probably would include all the jets for fiscal year 2018 through fiscal 2020 in the Pentagon’s latest five-year plan

Over $100 billion has been spent on the F35 program so far and the planes are still months away from being certified combat ready.

The F-35 program office found that as of January 2014, costs for the F-35 fleet over a 53-year life cycle was $857 billion. Costs for the fighter have been dropping and accounted for the 22 percent life cycle drop since 2010.

The empty weight of an F-35 jet is 32000 pounds. At $1300 per ounce this $670.8 million. The life cycle cost of each F35 is more than buying its weight in solid gold.

New Plan would double previously planned 2018-2020 F35 production

In December 2014, the Russian Air Force planned to receive 55 fighters by 2020. But Yuri Borisov, Russia's deputy minister of defence for armaments stated in March 2015 that the Air Force will slow PAK FA production and reduce its initial order to 12 jets due to the nation's deteriorating economy. Due to the aircraft's complexity and rising costs, the Russian Air Force will retain large fleets of fourth-generation Sukhoi Su-27 and Su-35S to supplement the PAK FA in frontline aviation

Fifth Generation Fighter Expected Totals

A late 2014 IHS forecast, the United States alone was projected to purchase 2,616 fifth-generation aircraft; a mixture of F-22s to be used by the Air Force and F-35 variants for the Air Force, Marines and Navy. NATO allies, specifically the United Kingdom, the Netherlands, Denmark, Norway, Italy, Turkey and Canada, are forecast to purchase more than 600 of these advanced planes. Other U.S. allies such as Japan, South Korea and Australia are also on track to procure approximately 300 such planes.

Rounding out the likely future purchases, Russia, China and India are expected to acquire more than 1,500 fifth-generation aircraft, intended to replace the Su-27, Su-30 and MiG-29 models, along with other indigenous aircraft.

This was before the likely cutback of T50s ordered by Russia and India.
It also assumes that the F35 will not be cancelled or significantly cutback in the 2020s.
The trend is downward as previously the expectation was 3200 fifth generation planes for the USA.

SOURCES- Janes, Wikipedia, Bloomberg, IHS

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